PROCESS TECHNOLOGY SYSTEMS, INC.
LOCK-UP/LEAK-OUT AGREEMENT
THIS LOCK-UP/LEAK-OUT AGREEMENT (the "Agreement") is made and
entered into as of the ___ day of March,
2005, between Process Technology
Systems, Inc., a Nevada corporation
("Process"), and the individuals that
execute and deliver a Counterpart Signature
Page hereof, and sometimes
collectively referred to herein as the
"Shareholders" and each, a
"Shareholder." For all purposes of this
Agreement, "Shareholder" includes any
"affiliate, controlling person of
Shareholder, agent, representative or other
person with whom Shareholder is acting in
concert with.
WHEREAS, it is contemplated that certain persons will be acquiring
a
substantial portion of the authorized
Common Stock of Process pursuant to
written Subscription Agreements to which
this Agreement is attached as Exhibit
B thereto (the "Buyers"); and
WHEREAS, subsequent to the acceptance of such Subscription
Agreements, the Company is planning to
enter into a reorganization
transaction, meaning a material
acquisition, reorganization, merger or other
transaction such that the Company will no
longer be considered to be a "blank
check company" as defined in Rule 504(a)(3)
of the Securities and Exchange
Commission (the "Reorganization
Transaction"); and
WHEREAS, in order to facilitate the consummation of the
transactions
contemplated by the Reorganization
Transaction and to protect the Company,
the Shareholders have agreed to enter into
this Agreement and to restrict the
public sale, assignment, transfer,
conveyance, hypothecation or alienation of
the Common Stock, all on the terms set
forth below.
NOW, THEREFORE, in consideration of the foregoing premises and
the
mutual covenants contained herein, the
receipt and sufficiency of which are
hereby acknowledged, the parties hereto
agree as follows:
1.
Except as otherwise expressly provided herein, and except as
each Shareholder may be otherwise
restricted from selling shares of Common
Stock, each Shareholder may only publicly
sell Common Stock subject to the
following conditions commencing on the
execution and delivery of this
Agreement and for the twenty-four (24)
month period from the filing of a Form
8-K12g-3 ("successor issuer" 8-K Current
Report) reporting the closing of the
Reorganization Transaction (the
"Lock-Up/Leak-Out Period"):
1.1
Each Shareholder shall not be allowed to sell any of
the shares of common stock purchased
pursuant to the Subscription Agreements
for a period of twelve (12) months from the
filing of the Form 8-K12g-3 (the
"Lock-up Period").
1.2
Each Shareholder shall be allowed to sell 1/12th of
such Shareholder's shares of Common Stock
per month during the last twelve
(12) months of the twenty-four (24) month
Lock-Up/Leak-Out Period (the
"Leak-Out Period"), on a non-cumulative
basis, meaning that if no Common Stock
was sold during one month while Common
Stock was qualified to be sold, such
shares of Common Stock could not be sold in
the next successive monthly
Leak-out Period.
1.3
Except as otherwise provided herein, all Common Stock
shall only be sold in "broker's
transactions" and each Shareholder must comply
with the "manner of sale" requirements as
those terms are defined in Rule 144
of the Securities and Exchange Commission
during the Lock-Up/Leak-Out Period.
1.4
An appropriate legend describing this Agreement shall
be imprinted on each stock certificate
representing Common Stock covered
hereby, and the transfer records of
Process' transfer agent shall reflect such
appropriate restrictions.
1.5
The Shareholders agree that they will not engage in any
short selling of the Common Stock during
the Lock-Up/Leak-Out Period.
1.6
During the Lock-Up/Leak/Out Period, Process shall
maintain its "reporting" status with the
Securities and Exchange Commission;
file all reports that are required to be
filed by it during such period; and
use its "best efforts" to ensure that the
Common Stock is continually quoted
for public trading on a nationally
recognized medium of no less significance
than the OTC Electronic Bulletin Board of
the National Association of
Securities Dealers, Inc. (the "NASD"), the
NASDAQ Small Cap or a recognized
national stock exchange.
1.7
During the Lock-Up/Leak-Out Period, each Shareholder
will be required to submit a legal opinion
to the Company with any requested
transfer hereunder to the effect that any
monthly sale is being made in
compliance with this Agreement.
1.8
Process shall timely file the 8-K12g-3 Current Report
with the Securities and Exchange
Commission.
2.
The delivery of a duly executed copy of the Broker/Dealer
Agreement by a selling Shareholder's broker
and a duly executed Seller's
Resale Agreement by the selling Shareholder
in the forms attached hereto shall
be satisfactory evidence for all purposes
of this Agreement that such selling
Shareholder and its broker will comply with
the "broker's transactions" and
"manner of sale" requirements of this
Agreement, and no further evidence
thereof will be required of any selling
Shareholder; provided, however,
Process may confirm such compliance with
any Shareholder and any selling
Shareholder's broker, to the extent that it
deems reasonably required or
necessary to assure compliance with this
Agreement.
3.
Notwithstanding anything to the contrary set forth herein,
Process may, in its sole discretion and in
good faith, at any time and from
time to time, waive any of the conditions
or restrictions contained herein to
increase the liquidity of the Common Stock
or if such waiver would otherwise
be in the best interests of the development
of the trading market for the
Common Stock. Unless otherwise agreed by the
Shareholders, all such waivers
shall be pro rata, as to all of the
Shareholders who executed a
Lock-Up/Leak-Out Agreement in connection
with the execution and delivery of
the Subscription Agreements whose Common
Stock can, at the time of any such
waiver, be publicly sold in accordance with
the Securities Act of 1933, as
amended (the "Securities Act"), or Rule 144
promulgated thereunder by the
Securities and Exchange Commission or
otherwise.
4.
Other than the contemplated Reorganization Transaction or any
merger with a s
